The Rockets hold a $960,000 option on the final year of Parsons’ deal, but will allow him to test restricted free agency instead of letting him walk next summer when he is an unrestricted free agent. This summer, the team still has the ability to match any offer Parsons receives.

One scenario suggested by the Yahoo Sports report allows Houston to have three max contracts and a top-tier free agent, in addition to retaining Parsons.

In one scenario, Houston could secure three max-out players – including Howard, Harden and a potential star free agent – and then re-sign Parsons to an extension below the max-level range. Parsons could command in the $12 million to $13 million annual range, league executives tell Yahoo Sports.